MAHESH M. GANDHI, MUMBAI V. ACIT 20(2), MUMBAI

ITA 2976/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8343 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 22-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D D JIMULIA
• Keywords: Recovery proceedings; Principle of natural justice; Initiation of penalty proceedings; Reasonable cause; Revised return
• Section: 143(3)

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.2976/ MUM/2016 ( / ASSESSMENT YEAR : 2011-12) SHRI MAHESH M. GANDHI, 303/304, SHOLAY APARTMENTS, RAHEJA COMPLEX, SEVEN BUNGALOWS, VERSOVA, ANDHERI (W), MUMBAI 400 061. / V. ASST. COMMISSIONER OF INCOME TAX 20(2), MUMBAI. ./ PAN : AABPG3545P ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI D.D. JIMULIA REVENUE BY : SHRI SAURABHKUMAR RAI ,DR / DATE OF HEARING : 04-01-2017 / DATE OF PRONOUNCEMENT : 27-02-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 2976/MUM/2016, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 05-02-20 16 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 36, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2011-12, THE APPE LLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ORDER DATED 26- 08-2014 PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT,1961 (HEREINAFTER C ALLED THE ACT). ITA 2976/MUM/2016 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. (A) THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE PENALTY LEVIED ON THE APPELL ANT. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THE FACT THAT THERE WAS NO CLARITY AT THE TIME OF INITIATION OF THE PENALTY PROCEEDINGS AS TO RELEVANT CLAUSE UNDER WH ICH THE PENALTY PROCEEDINGS ARE INITIATED/APPLICABLE AND HENCE THE P ENALTY ORDER IS VOID. (C) THE APPELLANT PRAYS THAT THE PENALTY ORDER PASSED U/S 271(1)(C) BE ANNULLED/CANCELLED AS VOID AB-INITIO. 2. (A) ON MERITS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE PENALTY LEVIED ON THE A PPELLANT. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO APPRECIATE THE FACT THAT THERE WAS A GENUINE ERROR AN D THE INCOME WAS INADVERTENTLY OMITTED TO BE CONSIDERED IN THE COMPUTATI ON AND THE APPELLANT HAD FILED THE REVISED COMPUTATION OF INCOME AND PAID THE TAXES WITH INTEREST AS APPLICABLE AND THERE WAS NO IN TENT ON THE PART OF THE APPELLANT TO FURNISH CONCEAL INCOME OR FURNISH INA CCURATE PARTICULARS OF HIS INCOME AS CONTEMPLATED UNDER SECTIO N 271 (L)( C) OF THE INCOME TAX ACT, 1961. (C) THE APPELLANT PRAYS THAT THE PENALTY LEVIED U/S 2 71(L)(C) BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT IN THE CASE OF THE ASSESSEE WAS FRAMED U/S 143(3) OF THE ACT VIDE ASSE SSMENT ORDER DATED 20- 02-2014 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. 4,49,05,250/- AS AGAINST RETURNED INCOME OF RS. 4,32,81,605/- , WHER EIN ADDITIONS HAVE BEEN MADE ON ACCOUNT OF DIRECTORS SITTING FEES TO THE T UNE OF RS. 4 LACS AND SHORT TERM CAPITAL GAINS TO THE TUNE OF RS. 12,23,642/- O N REDEMPTION OF HDFC MUTUAL FUNDS WHICH WERE NOT SHOWN IN RETURN OF INCO ME FILED BY THE ASSESSEE. PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT IN RESPECT OF ITA 2976/MUM/2016 3 ADDITIONS MADE BY THE ASSESSEE AND NOTICE DATED 20- 02-2014 U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED BY THE AO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 14 3(3) R.W.S. 143(2) OF THE ACT , IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 3,80,000/- TOWARDS DIRECTORS SITTING FEES WHIC H HAD NOT BEEN OFFERED FOR TAXATION BY THE ASSESSEE IN COMPUTATION OF INCOME F ILED WITH THE REVENUE. THE ASSESSEE WAS SHOW CAUSED AS TO WHY DIRECTORS S ITTING FEES SHOULD NOT BE ADDED TO THE TOTAL INCOME. IN REPLY, THE ASSESSEE VIDE HIS LETTER DATED 10-02- 2014 SUBMITTED AS UNDER:- DIRECTORS SITTING FEES: SINCE I HAD NOT MAINTAINED B OOKS OF ACCOUNTS, THE SAID INCOME HAD ESCAPED THE WORKING WHILE FINALI ZING MY INCOME TAX RETURN. THE SAME CAN BE ADDED TO MY INCOME AND I W ILL PAY THE APPROPRIATE TAX ON THE SAME. AS REGARDS NON DISCLOSURE OF INCOME, I WOULD LIKE TO STATE THAT I AM AN HONEST ASSESSEE AND THE ABOVE MISTAKE IS ONLY DUE TO O VER SIGHT AND NON MAINTENANCE OF BOOKS OF ACCOUNTS. I WOULD ALSO L IKE TO DRAW YOUR ATTENTION TO THE PROFESSIONAL FEES OFFERED FOR TAX. THE ENTIRE INCOME HAS BEEN OFFERED FOR TAX AND NO EXPENSES HAVE BEEN CLAIM ED AGAINST THE SAME WHICH ALSO EXPLAINS MY INTENTION IS NEVER TO CON CEAL INCOME OR NOT PAY APPROPRIATE TAXES. THE ASSESSEE FILED REVISED COMPUTATION OF INCOME OF FERING RS. 4 LACS AS DIRECTORS FEES WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO WHILE FRAMING ASSESSMENT ORDER DATED 20-2-2014 PASS ED U/S 143(3) OF THE ACT. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS ALSO INITIATED BY THE AO. IT WAS ALSO OBSERVED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE ACT THAT THE ASSESS EE HAD RECEIVED AN AMOUNT OF RS. 31,39,368/- AND RS. 30,84,274/- ON ACCOUNT O F REDEMPTION OF HDFC GROWTH FUNDS AND HDFC TOP 200 FUNDS RESPECTIVELY. T HE ASSESSEE WAS ITA 2976/MUM/2016 4 ASKED TO EXPLAIN WHETHER HE HAS SHOWN CAPITAL GAINS IN RESPECT OF THE ABOVE REDEMPTION IN HIS RETURN OF INCOME FILED WITH THE R EVENUE OR NOT. IN REPLY, THE ASSESSEE SUBMITTED AS UNDER:- REDEMPTION OF MUTUAL FUNDS: SINCE I HAD NOT MAINTAIN ED BOOKS OF ACCOUNTS, THE CAPITAL GAINS ON REDEMPTION OF MUTUAL F UNDS HAD ESCAPED THE WORKING WHILE FINALIZING MY INCOME TAX RE TURN. THE SAID CAPITAL GAINS CAN BE ADDED TO MY INCOME AND I WILL PA Y THE APPROPRIATE TAX ON THE SAME. AS REGARDS NON DISCLOSURE OF INCOME, I WOULD LIKE TO STATE THAT I AM AN HONEST ASSESSEE AND THE ABOVE MISTAKE IS ONLY DUE TO O VER SIGHT AND NON MAINTENANCE OF BOOKS OF ACCOUNTS. I WOULD ALSO L IKE TO DRAW YOUR ATTENTION TO THE PROFESSIONAL FEES OFFERED FOR TAX. THE ENTIRE INCOME HAS BEEN OFFERED FOR TAX AND NO EXPENSES HAVE BEEN CLAIM ED AGAINST THE SAME WHICH ALSO EXPLAINS MY INTENTION IS NEVER TO CON CEAL INCOME OR NOT PAY APPROPRIATE TAXES. THE ASSESSEE HAD FILED REVISED COMPUTATION OF INCOM E VIDE LETTER DATED 18.02.2014 OFFERING RS.12,23,642/- UNDER THE HEAD ' SHORT TERM CAPITAL GAINS'. AFTER CONSIDERING ASSESSEE'S EXPLANATION, T HE SHORT TERM CAPITAL GAIN OF RS. 12,23,642/- WAS ADDED BY THE AO TO THE TOTAL IN COME OF THE ASSESSEE IN THE ASSESSMENT ORDER DATED 20-02-2014 FRAMED U/S 14 3(3) OF THE ACT AND PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WAS I NITIATED. THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT, ON BEING ASKED, SUBMITTED BEFORE THE AO THAT H E DID NOT MAINTAINED BOOKS OF ACCOUNTS DURING THE YEAR AND DUE TO OVERSI GHT THE SAME REMAINED TO BE OFFERED FOR TAXATION. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE AN D OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE DURING THE ASSESSMENT PROCEEDINGS AS WELL DURING PENALTY PROCEEDINGS WHICH COULD ESTA BLISH THAT THERE WAS A REASONABLE CAUSE FOR NOT DECLARING THE SAID INCOMES IN HIS RETURN OF INCOME ITA 2976/MUM/2016 5 FILED WITH THE REVENUE. IT WAS OBSERVED BY THE AO T HAT MERELY BECAUSE THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT CANNOT BE A REASONABLE CAUSE FOR NOT DECLARING OF THE SAID INCOMES IN THE RETURN OF INCOME FILED WITH REVENUE. MOREOVER IT WAS OBSERVED BY THE AO THAT T HE INCOMES INVOLVED ARE NOT MEAGER AMOUNT THAT DUE TO OVERSIGHT THE ASSESSE E LEFT THE SAME TO BE OFFERED AS INCOME. IT WAS OBSERVED BY THE AO THAT I F THE ABOVE INCOME WAS LEFT TO BE INCLUDED IN THE RETURN OF INCOME FILED BY THE ASSESSSEE WITH THE REVENUE, THE ASSESSEE COULD HAVE COME FORWARD AND F ILED REVISED RETURN OF INCOME WHICH WAS NOT DONE BY THE ASSESSEE AS NO REV ISED RETURN OF INCOME WAS FILED BY THE ASSESSEE. IT WAS OBSERVED BY THE A O THAT ONLY WHEN QUERIED BY THE A.O., THE ASSESSEE HAD COME FORWARD AND DECL ARED THE INCOME BY FILING REVISED COMPUTATION OF INCOME WHICH SHOWS THAT THE ASSESSEES INTENTION OF EVADING TAXES BY NOT DISCLOSING THE INCOME IN THE R ETURN OF INCOME FILED WITH THE REVENUE. THUS, THE A.O. HELD THAT IN THE INSTA NT CASE MENS REA IS PROVED FROM THE CONDUCT OF THE ASSESSEE AND THAT THE ASSES SEE HAS CONCEALED THE INCOME BY FURNISHING INACCURATE PARTICULARS OF INCO ME AND COMMITTED DEFAULT U/S 271(1)(C) OF THE ACT AND THIS IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, WHEREIN THE AO IMPOSED PENALTY OF RS.3,13, 000/- AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 26-08-2014. 4. AGGRIEVED BY THE ORDER DATED 26-08-2014 PASSED B Y THE A.O. U/S 271(1)(C) OF THE ACT LEVYING PENALTY OF RS.3,13,000/- AGAINST THE ASSESSEE, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) IN APPEAL WHO REJECTED THE CONTENTIONS OF THE ASSESSEE AND CONFIRMED THE ORDER DATED 26-08 -2014 PASSED BY THE A.O. U/S 271(1)(C) OF THE ACT LEVYING PENALTY OF RS.3,13 ,000/- AGAINST THE ASSESSEE. THE LD. CIT(A) RELIED UPON SEVERAL CASE LAWS AS DET AILED IN THE APPELLATE ORDER DATED 05-02-2016 AND OBSERVED THAT THE ASSESSEE HAS CONCEALED INCOME BY WAY OF FURNISHING OF INACCURATE PARTICULARS OF INCO ME AND THE ASSESSEE FAILED TO OFFER ANY COGENT EXPLANATION IN SUPPORT OF HIS C LAIM. THE ASSESSEES ARGUMENT THAT THE MISTAKE IS ONLY DUE TO OVERSIGHT FOR NON-MAINTENANCE OF ITA 2976/MUM/2016 6 BOOKS OF ACCOUNTS WAS REJECTED BY LEARNED CIT(A) AN D LEARNED CIT(A) OBSERVED THAT THE ASSESSEE ONLY OFFERED SAID INCOME WHEN SPE CIFICALLY CONFRONTED BY THE AO WHEREIN THE ASSESSEE ONLY FILED REVISED COMPUTAT ION OF INCOME BEFORE THE AO DURING ASSESSMENT PROCEEDINGS AND NOT EVEN FILED REVISED RETURN OF INCOME. THUS, THE LD. CIT(A) HELD VIDE APPELLATE OR DERS DATED 05-02-2016 THAT THE ASSESSEES CASE FALLS WITHIN THE AMBIT OF SECTI ON 271(1)(C) OF THE ACT AND THE A.O. WAS RIGHT IN LEVYING PENALTY OF RS. 3,13,0 00/- U/S 271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE APPELLATE ORDER DATED 05-02-201 6 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT DOES NOT SPE CIFY THE CHARGE UNDER WHICH PENALTY PROCEEDINGS WERE INITIATED I.E. WHETHER THE ASSESSEE IS CHARGED FOR CONCEALING THE PARTICULARS OF INCOME OR IS CHARGED WITH FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS , IT WAS SUB MITTED THAT THE A.O. IS NOT CLEAR ABOUT THE CHARGE AGAINST THE ASSESSEE FOR LEV Y OF PENALTY U/S 271(1)(C) OF THE ACT AND IN THE ABSENCE OF THE SPECIFIC CHARGE W ITH WHICH THE ASSESSEE IS BEING SOUGHT TO BE BURDENED , THE WHOLE PROCEEDINGS ARE VITIATED AND ARE BAD IN LAW LIABLE TO BE QUASHED. THE LEARNED COUNSEL FO R THE ASSESSEE DREW OUR ATTENTION TO NOTICE DATED 20-02-2014 U/S 274 READ W ITH SECTION 271(1)(C) OF THE ACT ISSUED BY THE AO , WHICH IS PLACED IN PAPER BOOK/PAGE 3 FILED WITH THE TRIBUNAL. IN SUPPORT OF HIS CONTENTION, THE LD. CO UNSEL FOR THE ASSESSEE RELIED UPON THE ORDER DATED 21-12-2016 OF THE MUMBAI BENCH ES OF THE TRIBUNAL IN THE CASE OF DR. SARITA MILIND DAVARE V. ACIT FOR AS SESSMENT YEAR 2009-10, WHICH ORDER OF THE TRIBUNAL IS PLACED IN FILE. HE SUBMITTED THAT THE ASSESSEE IS A SALARIED EMPLOYEE AS WELL HAD INCOME FROM PROFESS ION. IT WAS SUBMITTED THAT THERE WAS ONLY ONE/SINGLE RECEIPT OF PROFESSIO NAL FEE OF RS.2,73,75,00/- FROM ABROAD WHICH WAS SUBJECTED TO TAX AUDIT. IT WA S SUBMITTED THAT NO ITA 2976/MUM/2016 7 EXPENSES WERE CLAIMED AGAINST THESE PROFESSIONAL IN COME AND THIS SHOWS THAT THE ASSESSEE IS AN HONEST TAX-PAYER AND HAS NO INTENTION OF SUPPRESSING INCOME . THE EXTRACTS OF COPIES OF COMPUTATION OF I NCOME AND TAX AUDIT REPORT ARE PLACED IN PAPER BOOK/PAGE17-24 FILED WITH THE T RIBUNAL AND TO BUTTRESS HIS ARGUMENTS , OUR ATTENTION WAS DRAWN TO THESE EX TRACTS ALTHOUGH COMPLETE TAX AUDIT REPORT ETC. ARE NOT PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL. IT WAS SUBMITTED THAT THE TAX AUDIT REPORT DATED 30-09 -2011 WAS RECEIVED BY THE ASSESSEE ONLY ON 30 TH SEPTEMBER, 2011 WHICH HAPPENS TO BE THE LAST DATE FOR FILING OF RETURN OF INCOME AS STIPULATED U/S 13 9(1) OF THE ACT AND THE ASSESSEE HAD TO FILE THE RETURN IN A HURRY ON 30-09 -2011 ITSELF AND ASSESSEE INADVERTENTLY MISSED OUT INCLUDING THE DIRECTORS S ITTING FEES AND THE SHORT TERM CAPITAL GAINS EARNED BY THE ASSESSEE FROM MUTU AL FUNDS IN THE RETURN OF INCOME FILED WITH THE REVENUE ON 30-09-2011, WHEREI N IT WAS SUBMITTED THAT THERE WAS NO MENS REA OR MALAFIDE ON THE PART OF TH E ASSESSEE TO CONCEAL SAID INCOME FROM THE REVENUE WITH AN INTENTION TO EVADE TAXES. WHEN THE MISTAKE WAS BROUGHT TO THE ASSESSEES KNOWLEDGE BY THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT READ W ITH SECTION 143(2) OF THE ACT , THE ASSESSEE IMMEDIATELY FILED REVISED COMPUT ATION OF INCOME AND PAID DUE TAXES TO THE REVENUE WITH INTEREST. HE SUBMITT ED THAT THE ASSESSEE BEING A SALARIED EMPLOYEE, THIS MISTAKE WAS INADVERTENT A ND NOT WILLFUL AND RATHER IT WAS AN ERROR WHICH OCCURRED INADVERTENTLY. THUS, I T IS SUBMITTED THAT THERE IS NO APPLICATION OF MIND BY THE A.O. BEFORE ISSUING NOTICE DATED 20-02-2014 U/S 274 R.W.S. 271(1)(C) OF THE ACT IN AN MECHANICA L MANNER WITHOUT APPLICATION OF MIND. OUR ATTENTION WAS ALSO DRAWN TO THE ORDER OF ITAT, KOLKATA BENCH IN THE CASE OF CHANDRA PRAKASH BUBNA V. ITO REPORTED IN [2015] 64 TAXMANN.COM 155 AND SUBMITTED THAT THE AS SESSEE BEING AN HONEST TAXPAYER AND THE MISTAKE HAD INADVERTENTLY CREPT IN THE RETURN OF INCOME WHICH WAS IMMEDIATELY RECTIFIED ONCE THE AO BROUGHT THE SAME TO THE NOTICE OF THE ASSESSEE WHEREIN THE ASSESSEE FILED REVISED COMPUTATION OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND PAI D THE DUE TAXES WITH ITA 2976/MUM/2016 8 INTEREST TO THE REVENUE ONCE THE ERROR WAS POINTED TO THE ASSESSEE BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143 (3) R.W.S. 143(2) OF THE ACT. IT WAS SUBMITTED THAT SINCE NO BOOKS OF ACCOU NT WERE MAINTAINED BY THE ASSESSEE THENCE THE ERROR TOOK PLACE AND WHEN THE E RROR CAME TO THE NOTICE OF THE AO , TAXES ALONG WITH INTEREST WERE PAID TO THE REVENUE. 7. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE HAS CONCEALED HIS INCOME BY FURNISHING INACCURATE PARTI CULARS OF INCOME. THE ASSESSEE HAS NOT RAISED THIS LEGAL GROUND BEFORE LD . CIT(A) REGARDING NON- SPECIFICATION OF CHARGE UNDER WHICH PENALTY PROCEED INGS WERE INITIATED BY THE AO AND IT IS FOR THE FIRST TIME BEFORE THE TRIBUNAL THAT SAID LEGAL CONTENTIONS WERE RAISED . HE DREW OUR ATTENTION TO THE GROUNDS OF APPEAL FILED BEFORE THE LEARNED CIT(A) AS WELL TO THE APPELLATE ORDER DATED 05-02-2016 PASSED BY LEARNED CIT(A). IT WAS SUBMITTED BY LEARNED DR THAT IS A WILLFUL MISTAKE COMMITTED BY THE ASSESSEE TO EVADE TAXES AND ONCE THE ASSESSEE WAS CORNERED AND CONFRONTED BY REVENUE , THE ASSESSEE C AME FORWARD AND FILED REVISED COMPUTATION OF INCOME AND PAID TAXES.IT WAS SUBMITTED BY LEARNED DR THAT ONLY VERY LESS PERCENTAGE OF RETURNS OF INCOME ARE SELECTED FOR SCRUTINY AND IN CASE THE RETURN OF INCOME OF THE ASSESSEE WA S NOT SELECTED FOR SCRUTINY, THIS NON DECLARATION OF INCOME WOULD HAVE GONE UN-N OTICED AND TAXES WOULD HAVE BEEN SUCCESSFULLY EVADED BY THE ASSESSEE. IT W AS SUBMITTED THAT BOTH THE HEADS OF INCOME WHICH WERE NOT DECLARED TO THE REVENUE BY THE ASSESSEE IN RETURN OF INCOME FILED , WERE NOT SUBJECTED TO T AX DEDUCTION AT SOURCE AND HENCE , THE REVENUE DID NOT HAD KNOWLEDGE OF THESE INCOME EARNED BY THE ASSESSEE BUT FOR SCRUTINY ASSESSMENT U/S 143(3) R.W .S. 143(2) OF THE ACT, THIS TAX EVASION CAME TO THE NOTICE OF THE REVENUE. IT W AS SUBMITTED THAT THE ASSESSEE CANNOT SAY THAT THIS IS AN INADVERTENT MIS TAKE AND IT IS ONLY WHEN THE ASSESSEE WAS CORNERED BY THE REVENUE , THE ASSE SSEE CAME FORWARD TO FILE REVISED COMPUTATION OF INCOME BY INCLUDING DIRECTOR SITTING FEE AND SHORT TERM CAPITAL GAINS AND PAY DUE TAXES. ITA 2976/MUM/2016 9 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON BY THE RIVAL PARTIES. WE HAVE OBSERVED THAT THE ASSESSEE IS A SALARIED EMPL OYEE. WE HAVE ALSO OBSERVED THAT THE ASSESSEE ALSO RECEIVED PROFESSION AL INCOME OF RS. 2,73,75,000/- FROM ABROAD IN A SINGLE SHOT PAYMENT AND IT WAS CLAIMED THAT NO EXPENSES HAD BEEN INCURRED AGAINST THIS PROFESSI ONAL INCOME. THE ASSESSEE GOT TAX-AUDIT CONDUCTED BY A QUALIFIED CHA RTERED ACCOUNTANT AS PRESCRIBED U/S 44AB OF THE ACT W.R.T. PROFESSIONAL RECEIPTS. THE CASE WAS SELECTED FOR SCRUTINY BY REVENUE FOR FRAMING ASSESS MENT U/S 143(3) OF THE ACT. THE A.O. DURING COURSE OF ASSESSMENT PROCEEDI NGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT OBSERVED THAT THE ASSESSE E HAS NOT DISCLOSED INCOME ON ACCOUNT OF DIRECTORS SITTING FEE OF RS. 4 LACS A ND SHORT TERM CAPITAL GAIN OF RS. 12,23,642/- EARNED BY THE ASSESSEE DURING THE P REVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR IN THE RETURN OF INCOM E FILED WITH THE REVENUE AND ON BEING CORNERED AND CONFRONTED BY THE REVENUE , THE ASSESSEE HAD ADMITTED HAVING EARNED THE SAID INCOME(S) BY FILING REVISED COMPUTATION OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS . ON BEING ASKED THE ASSESSEE STATED BEFORE THE AO THAT INADVERTENTLY DU E TO MISTAKE THE SAID INCOME(S) WERE NOT DISCLOSED IN THE RETURN OF INCOM E FILED WITH THE REVENUE. THE ASSESSEE ALSO SUBMITTED THAT ONE OF THE REASONS FOR THESE INADVERTENT MISTAKES WERE NOT MAINTENANCE OF BOOKS OF ACCOUNTS BY THE ASSESSEE AND ALSO DUE TO THE FACT THAT TAX-AUDIT AS PRESCRIBED U /S 44AB OF THE ACT WAS COMPLETED ONLY ON 30-09-2011 WHICH HAPPENED TO BE T HE LAST DATE OF FILING OF RETURN OF INCOME AS STIPULATED U/S 139(1) OF THE AC T AND THE RETURN OF INCOME WAS FILED ON 30-09-2011 IN HASTE/HURRY. WHEN CORNER ED AND CONFRONTED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE ACT , THE ASSESSEE FILED REVISED COMPUTATION OF INCOME AND PAID DUE TAXES ALONG-WITH INTEREST ON THESE INCOME EARNED BY THE ASSESSEE VIZ. DIRECTOR SITTING FEE OF RS. 4,00,000/- AND SHORT TERM CAPITA L GAINS OF RS.12,32,642/- ITA 2976/MUM/2016 10 ON REDEMPTION OF HDFC MUTUAL FUNDS. IT IS CLAIMED BY THE ASSESSEE THAT THE ASSESSEE IS AN HONEST TAXPAYER, THE ASSESSEE HAVING PAID THE TAXES ALONG WITH INTEREST IMMEDIATELY ON COMING TO KNOW OF THE MISTA KE OF HAVING OMITTED TO HAVE DECLARED THESE INCOME OF DIRECTOR SITTING FEE OF RS. 4,00,000/- AND SHORT TERM CAPITAL GAINS OF RS.12,32,642/- ARISING FROM REDEMPTION OF HDFC MUTUAL FUNDS. THE PLEA OF THE ASSESSEE THAT BOOKS OF ACCOUNT WERE NOT MAINTAINED OR THE TAX-AUDIT REPORT WAS RECEIVED ON THE LAST DATE OF FILING OF RETURN OF INCOME ON 30-09-2011 WHICH LED TO INADVER TENT MISTAKE CANNOT BE ACCEPTED AS THE ASSESSEE WAS FULLY AWARE OF THE REC EIPT OF INCOME OF DIRECTOR SITTING FEE OF RS 4,00,000/- AS WELL CAPITAL GAINS ARISING FROM REDEMPTION OF HDFC MUTUAL FUNDS TO THE TUNE OF RS.31,39,368/- AND RS. 30,84,274/- WHICH BY NO MEANS ARE MEAGER AMOUNTS WHICH CAN BE C LAIMED TO HAVE SKIPPED THE ATTENTION OF THE ASSESSEE IN ORDINARY A ND NORMAL COURSE WHILE FILING RETURN OF INCOME WITH THE REVENUE MORE SO TH AT ASSESSEE IS DERIVING INCOME MAINLY FROM SALARIES AND ALSO THAT THE PROFE SSIONAL RECEIPT OF RS. 2,73,75,000/- RECEIVED BY THE ASSESSEE DURING THE P REVIOUS YEAR IS EARNED FROM ABROAD WHICH IS IN THE FORM OF SINGLE SHOT REC EIPT IN THE BANK AND THAT TOO NO EXPENSES WERE CLAIMED BY THE ASSESSEE AGAINS T THIS PROFESSIONAL RECEIPT. THUS UNDER THE AFORE-STATED CIRCUMSTANCES , NO ELABORATE RECORDS WOULD HAVE BEEN GENERATED IN THE COURSE OF HIS PROF ESSIONAL RECEIPTS AS BEING SINGLE RECEIPT IN BANK WITH NO EXPENSES BEING CLAIM ED AND ALSO OTHER INCOMES SUCH AS SALARY ETC WHICH COULD HAVE LEAD TO THE ASS ESSEE BEING OVERBURDENED SO THAT IT LED TO OMITTING IN INCLUDING DIRECTOR SI TTING FEE AS WELL CAPITAL GAINS ON REDEMPTION OF MUTUAL FUND IN THE DECLARATION OF INCOME IN THE RETURN OF INCOME FILED WITH THE REVENUE. IT IS ONLY WHEN TH E ASSESSEE WAS CORNERED AND CONFRONTED BY THE A.O., THE ASSESSEE CAME FORWA RD WITH THE REVISED COMPUTATION OF INCOME AND PAID DUE TAXES TO THE REV ENUE. THIS, IN OUR CONSIDERED VIEW IN THE INSTANT APPEAL BASED ON FACT S AND CIRCUMSTANCES OF THE CASE IS NOT A REASONABLE AND BONAFIDE CAUSE FOR NON -DECLARATION OF INCOME IN THE RETURN OF INCOME FILED WITH THE REVENUE TO GET OUT OF RIGORS OF SECTION ITA 2976/MUM/2016 11 271(1)(C) OF THE ACT, KEEPING IN VIEW PECULIAR FACT S AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAD ALSO RAISED A LEGAL GROUND THAT NO SPECIFIC CHARGE HAS BEEN FRAMED BY THE REVENUE AGAINST THE ASSESSEE WHILE IN ITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT R.W.S. 274 OF THE ACT AS TO WHETHER THE ASSESSEE DID CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN-ACCURATE PARTICULARS OF INCOME AND IN THE ABSENCE THEREOF, T HE PENALTY PROCEEDINGS, IN THE OPINION OF THE ASSESSEE ARE NOT SUSTAINABLE IN LAW. WE HAVE GONE THROUGH NOTICE DATED 20-02-2014 ISSUED BY THE AO U/S 274 RE AD WITH SECTION 271(1)(C) OF THE ACT WHICH IS REPRODUCED HEREUNDER AND IT READS AS UNDER:- OFFICE OF : JCIT 20(2), MUMBAI NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 FILE NO. 10 DATED : 20/02/2014 PAN : AABPG3545P TO SHRI MAHESH MANILAL GANDHI, 304, SHOLAY REHEJA COMPLEX SEVEN BUNGLOW ANDHERI-W MUMBAI MAHARASHTRA 400061 SIR/MADAM, WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2011-12, IT APPEARS THAT YOU HAVE CONCEALED THE PARTICULARS OF YOUR INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME ON 19/ 03/2014 AT 11:30 AM AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT B E MADE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. IF NO ONE ATTENDS THIS OFFICE ON THE SAID DATE THE CASE SHALL BE DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORDS. YOURS FAITHFULLY SD/- ITA 2976/MUM/2016 12 (P. K. SINGH) JCIT 20 (2) ,MUMBAI SEAL OFFICE OF: DATE AND TIME OF ATTENDING: 19- MAR 14 AT 11.30 IT IS PERTINENT TO MENTION HERE THAT THE ABOVE NOTI CE DATED 20-02-2014 ISSUED BY THE AO U/S 274 READ WITH SECTION 271(1)(C) OF TH E ACT IS NOT A STANDARD PRINTED FORMAT BUT IS A TYPED NOTICE ISSUED TO THE ASSESSEE. WE HAVE OBSERVED THAT THE ASSESSEE HAS RAISED LEGAL GROUND FOR THE F IRST TIME REGARDING NON FRAMING OF SPECIFIC CHARGE AGAINST THE ASSESSEE BY THE AO W.R.T. WHETHER THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. THE LAW-MAKERS HAVE INSERTED SUB-SECTION (1B) TO SECTION 271 OF THE ACT BY FINANCE ACT, 2008 , W.E.F . 01-04-1989 WHEREIN IT IS PROVIDED THAT WHERE ANY AMOUNT IS ADDED OR DISALLOW ED IN COMPUTING THE TOTAL INCOME OR LOSS OF AN TAX-PAYER IN ANY ORDER O F ASSESSMENT OR REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTIO N FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECTION (1) , S UCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATIS FACTION OF THE ASSESSING OFFICER FOR INITIATION OF THE PENALTY PROCEEDINGS U NDER THE SAID CLAUSE 271(1)(C) OF THE ACT. IN THE ASSESSMENT ORDER DATED 20-02-201 4 PASSED BY THE AO U/S 143(3) OF THE ACT, THE AO HAS DULY RECORDED DETAILE D WELL REASONED SATISFACTION BEFORE INVOKING PROVISIONS OF SECTION 271(1)(C) OF THE ACT WITH RESPECT TO BOTH THE ADDITIONS MADE IN THE ASSESSMENT ORDER DATED 20 -02-2014 PASSED U/S 143(3) OF THE ACT WHICH SHOWS APPLICATION OF MIND B Y THE AO , WHEREIN THE AO RECORDED AS UNDER : 5. *** *** THE ASSESSEE HAS VIDE LETTER DATED 18.02.2014 FILED REVISED COMPUTATION OF INCOME OFFERING RS. 4,00,000/- AS DIRECTORS SIT TING FEES. THE EXPLANATION ITA 2976/MUM/2016 13 SUBMITTED BY THE ASSESSEE IS CONSIDERED . IT IS NOT ED THAT THE ASSESSEE HAS MADE DISCLOSURE OF INCOME OF RS. 4,00,000/- ONLY AF TER THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE DID NOT POI NTED OUT VOLUNTARILY AFTER RECEIPT OF STATUTORY NOTICE U/S 143(3) WHICH WAS ISS UED AFTER ONE YEAR OF FILING OF RETURN OF INCOME. EVEN AFTER THAT WHEN THE CASE WAS UNDER HEARING, THE ASSESSEE DID NOT OFFER THE INCOME OF RS.4,00,000/- BEING DIRECTORS SITTING FEES UNLESS HE WAS SPECIFICALLY ASKED TO EXPLAIN THE SAME . IT IS , THEREFORE EVIDENT FROM THE CONDUCT OF THE ASSESSEE THAT HE WAS TRYING TO EVADE THE INCOME TO THE EXTENT OF RS. 4,00,000/-. CONSIDERING THESE FACTS, INCOME OF RS. 4,00,000/- IS ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. CONSI DERING THESE FACTS, I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED HIS INCOM E BY FURNISHING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS. 4,00,000 /- AND THUS PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I T ACT, 1961 IS I NITIATED SEPARATELY ON THIS POINT. 6.. *** *** THE ASSESSEE HAS VIDE LETTER DATED 18.02.2014 FILED REVISED COMPUTATION OF INCOME OFFERING RS.12,23,642/- UNDER THE HEAD SHOR T TERM CAPITAL GAINS . THE EXPLANATION SUBMITTED BY THE ASSESSEE IS CONSID ERED. IT IS NOTED THAT THE ASSESSEE HAS MADE DISCLOSURE OF INCOME OF RS.12,23, 642/- ONLY AFTER THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE DID NOT POINTED OUT VOLUNTARILY AFTER RECEIPT OF STATUTORY NOTICE U/S 1 43(2) WHICH WAS ISSUED AFTER ONE YEAR OF FILING OF RETURN OF INCOME. EVEN AFTER THAT WHEN THE CASE WAS UNDER HEARING, THE ASSESSEE DID NOT OFFER THE INCOME OF R S.12,23,642/- BEING REDEMPTION OF HDFC MUTUAL FUND UNLESS HE WAS SPECIF ICALLY ASKED TO EXPLAIN THE SAME. IT IS , THEREFORE EVIDENT FROM THE CONDUC T OF THE ASSESSEE THAT HE WAS TRYING TO EVADE THE INCOME TO THE EXTENT OF RS.12,2 3,642/- . CONSIDERING THESE FACTS, INCOME OF RS.12,23,642/- IS ASSESSED UNDER T HE HEAD INCOME FROM CAPITAL GAIN. IN VIEW OF THE ABOVE FACTS, I AM SATIS FIED THAT THE ASSESSEE HAS CONCEALED HIS INCOME BY FURNISHING INACCURATE PARTI CULARS OF INCOME TO THE EXTENT OF RS.12,23,642/- AND THUS PENALTY PROCEEDIN GS U/S 271(1)(C) IF THE I T ACT, 1961 IS INITIATED SEPARATELY ON THIS POINT. IT IS ALSO PERTINENT TO REFER TO THE JUDGMENT OF HO NBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING F ACTORY (2013) 359 ITR 565 (KAR. HC) WHEREIN THE HONBLE KARNATAKA HIGH CO URT HELD AS UNDER : DEEMING PROVISION 48. AS THE OPENING WORDS OF EXPLANATION 1 MAKES IT CLE AR WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN E XPLANATION WHICH IS FOUND TO BE FALSE OR OFFERS AN EXPLANATION WHICH IS NOT ABLE TO SUBST ANTIATE AND FAILS TO PROVE THAT SUCH ITA 2976/MUM/2016 14 EXPLANATION IS BONA FIDE, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPEC T OF WHICH PARTICULARS HAVE BEEN CONCEALED. THEREFORE, IT IS CLEAR THAT AFORESAID IN STANCES BY ITSELF DO NOT CONSTITUTE CONCEALMENT. THE ASSESSING OFFICERS WERE JUST WRITI NG AT THE END OF THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS ARE INITIATED OR SOM ETHING TO THE EFFECT. THE DELHI HIGH COURT IN THE CASE OF RAM COMMERCIALS HAS HELD THAT SUCH A NOTE ALONE IN THE ASSESSMENT ORDER DOES NOT SATISFY THE REQUIREMENT O F ASSUMING JURISDICTION IN LAW IN RESPECT OF THE INITIATION OF PENALTY PROCEEDINGS. T HE SATISFACTION SHOULD BE IN THE ASSESSMENT ORDER. THE SAID VIEW WAS ALSO APPROVED B Y THE FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF CIT V. RAMPUR ENGG. [2009] 309 ITR 143/176 TAXMAN 211 . THE SAID VIEW HAS BEEN APPROVED BY THE APEX COURT IN TH E CASE OF DILIP N. SHROFF (SUPRA). THAT IS THE VIEW THE COURTS HAVE CONSISTENTLY TAKEN . AFTER TAKING NOTE OF THE JUDICIAL PRONOUNCEMENTS IN THIS REGARD, THE LEGISLATURE THOU GHT IT FIT TO INSERT SECTION 271(1)(B), WHICH READS AS UNDER: '271.(1)(B) WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSES SMENT OR REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECTION (1), SUCH AN ORDER OF ASS ESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSI NG OFFICER FOR INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C).' 49. BY THE AFORESAID DEEMING PROVISION A LEGAL FICTION IS CREATED. WHEN THE ASSESSMENT ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALT Y PROCEEDINGS SUCH ORDER SHALL DEEM TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FO R INITIATION OF PENALTY PROCEEDINGS UNDER SUB-CLAUSE (C) OF SECTION 271 OF THE ACT. AS THE LANGUAGE OF SECTION 271 MAKES IT CLEAR BEFORE A DIRECTION IS ISSUED TO PAY PENALTY, THE PERSON ISSUING THE DIRECTION MUST BE SATISFIED ABOUT THE CONDITION MENTIONED IN CLAUS E (C) OF SECTION 271(1). THE QUESTION IS, WHETHER SUCH SATISFACTION SHOULD BE IN WRITING. AS THE SATISFACTION HAS TO BE IN THE COURSE OF ANY PROCEEDINGS AND IT IS AT THE TIME OF COMPUTATION OF THE TOTAL INCOME OF ANY PERSON AND AS IT RESULTS IN AN ASSESSMENT ORDER WHI CH HAS TO BE MANDATORILY IN WRITING, THE SATISFACTION SHOULD BE FOUND IN THE SAID ORDER. THE EXISTENCE OF THESE FACTS IS A CONDITION PRECEDENT FOR INITIATION OF PENALTY PROCE EDINGS UNDER SECTION 271. THIS PROVISION IS ATTRACTED ONCE IN ANY SUCH ASSESSMENT ORDERS, A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECTION (1) IS MADE. THEREBY, IT MEANS EVEN IF THE ORDER DOES NOT CONTAIN A SPECIFIC FINDING TH AT THE ASSESSEE HAS CONCEALED INCOME OR HE IS DEEMED TO HAVE CONCEALED INCOME BECAUSE OF THE EXISTENCE OF FACTS WHICH ARE SET OUT IN EXPLANATION 1, IF A MERE DIRECTION TO IN ITIATE PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECTION (1) IS FOUND IN THE SAID ORDER, BY LEGAL FICTION, IT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FO R INITIATION OF PENALTY PROCEEDINGS UNDER SAID CLAUSE (C). THE SAID PROVISION CAME UP F OR INTERPRETATION BY THE DELHI HIGH COURT IN THE CASE OF MS. MADHUSHREE GUPTA V. UNION OF INDIA [2009] 317 ITR 107/183 TAXMAN 100 WHEREIN THE DELHI HIGH COURT HELD THAT THE SATISFA CTION SHOULD BE ITA 2976/MUM/2016 15 DISCERNIBLE IN THE ASSESSMENT ORDER. POSITION POST AMENDMENT IS NOT IN MUCH VARIANCE WITH PRE-AMENDMENT. THEY HELD THAT PROVISIONS WILL FALL FOUL OF ARTICLE 14 OF THE CONSTITUTION IF THE SAME IS NOT READ IN THE MANNER IT HAS READ AND IN FACT HAS READ DOWN THE PROVISIONS TO HOLD IT CONSTITUTIONAL. THEREFORE ACCORDING TO DELHI HIGH COURT, IN POST AMENDMENT AND PRE-AMENDMENT THERE IS NOT MUCH DIFFERENCE AND THE SATISFACTION IS REQUIRED TO ARRIVE IN THE COURSE OF ASSESSMENT PROC EEDINGS AND SHOULD BE DISCERNIBLE IN THE ASSESSMENT ORDER. THEREFORE, THIS PROVISION MAK ES IT ABUNDANTLY CLEAR THAT SATISFACTION OF THE ASSESSING OFFICER BEFORE INITIA TION OF PENALTY PROCEEDINGS IS A MUST. THE SATISFACTION SHOULD BE THAT HE HAS CONCEALED PA RTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULAR OF SUCH INCOME AND EVEN IN TH E ABSENCE OF THOSE EXPRESSED WORDS OR FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS, IF A DIRECTION AS AFORESAID IS MENTIONED, IT CONSTITUTES SATISFACTION OF THE ASSES SING OFFICER. DIRECTION 50. A READING OF SECTION CLEARLY INDICATES THAT THE AS SESSMENT ORDER SHOULD CONTAIN A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS. TH E MEANING OF THE WORD DIRECTION IS OF IMPORTANCE. MERELY SAYING THAT PENALTY PROCEEDINGS ARE BEING INITIATED WILL NOT SATISFY THE REQUIREMENT. THE DIRECTION TO INITIATE PROCEEDI NGS SHOULD BE CLEAR AND NOT BE AMBIGUOUS. IT IS WELL SETTLED LAW THAT FISCAL STATU TES ARE TO BE CONSTRUED STRICTLY AND MORE SO THE DEEMING PROVISIONS BY WAY OF LEGAL FICT ION ARE TO BE CONSTRUED MORE STRICTLY. THEY HAVE TO BE INTERPRETED ONLY FOR THE SAID ISSUE FOR WHICH IT HAS DEEMED AND THE MANNER IN WHICH THE DEEMING HAS BEEN CONTEMPLAT ED TO BE RESTRICTED IN THE MANNER SOUGHT TO BE DEEMED. AS THE WORDS USED IN THE LEGAL FICTION OR THE DEEMING PROVISIONS OF SECTION 271(1B) IS DIRECTION, IT IS IMPERATIVE THAT THE ASSESSMENT ORDER CONTAINS A DIRECTION. USE OF THE PHRASES LIKE (A) PENALTY PROC EEDINGS ARE BEING INITIATED SEPARATELY AND (B) PENALTY PROCEEDINGS UNDER SECTION 271(L)(C) ARE INITIATED SEPARATELY, DO NOT COMPLY WITH THE MEANING OF THE WORD DIRECTION AS CO NTEMPLATED EVEN IN THE AMENDED PROVISIONS OF LAW. THE DIRECTION SHOULD BE CLEAR AN D WITHOUT ANY AMBIGUITY. THE WORD 'DIRECTION' HAS BEEN INTERPRETED BY THE DECISION OF THE APEX COURT IN THE CASE OF RAJENDRANATH 120 ITR PG.14,WHERE IT HAS BEEN HELD T HAT IN ANY EVENT WHATEVER ELSE IT MAY AMOUNT TO, ON ITS VERY TERMS THE OBSERVATION TH AT THE ITO IS FREE TO TAKE ACTION, TO ASSESS THE EXCESS IN THE HAND OF THE CO-OWNERS CANN OT BE DESCRIBED AS A DIRECTION. A DIRECTION BY A STATUTORY AUTHORITY IS IN THE NATURE OF AN ORDER REQUIRING POSITIVE COMPLIANCE. WHEN IT IS LEFT TO THE OPTION AND DISCR ETION OF THE ITO WHETHER OR NOT TAKE ACTION, IT CANNOT BE DESCRIBED AS A DIRECTION. 51. THEREFORE, IT IS SETTLED LAW THAT IN THE ABSENCE O F THE EXISTENCE OF THESE CONDITIONS IN THE ASSESSMENT ORDER PENALTY PROCEEDINGS COULD NOT BE PROCEEDED WITH. THE PROCEEDINGS WHICH ARE INITIATED CONTRARY TO THE SAI D LEGAL POSITION ARE LIABLE TO BE SET ASIDE. WHEN DEEMING PROVISION NOT APPLICABLE 52. SUB-SECTION (1)(B) ONLY DEALS WITH SATISFACTION OF THE ASSESSING OFFICER. HOWEVER, UNDER THE SCHEME OF SECTION 271, THE PERSONS WHO AR E AUTHORISED TO COMPUTE INCOME AS WELL AS INITIATE THE PROCEEDINGS OR THE ASSESSING O FFICER OR THE COMMISSIONER OF ITA 2976/MUM/2016 16 APPEALS OR COMMISSIONER IN THE COURSE OF REVISIONAL JURISDICTION, EXPLANATION 1 APPLIES TO ALL THESE THREE OFFICERS WHEREAS THE DEEMING PRO VISION (1)(B) REFERS ONLY TO THE ASSESSING OFFICER. THEREFORE, IF AN ORDER OF ASSESS MENT IS PASSED BY COMMISSIONER OF APPEALS OR COMMISSIONER IN THE COURSE OF THE SAID P ROCEEDINGS, IF THEY ARE SATISFIED THAT THERE IS ANY CONCEALMENT OF PARTICULARS OF HIS INCO ME OR HE HAS FURNISHED INACCURATE PARTICULAR OF INCOME THE SAID SATISFACTION MUST BE EXPRESSLY STATED IN THE SAID ORDER. IF THAT IS NOT STATED, AT LEAST, THE ORDER SHOULD STAT E WHAT IS MENTIONED IN EXPLANATION 1. IT IS ONLY IF THOSE FACTS ARE SET OUT IN THE ORDER, TH EN THE DEEMING PROVISION IN EXPLANATION 1 APPLIES AND THE CONCEALMENT OF INCOME COULD BE PR ESUMED AND THEN THEY ARE ENTITLED TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271. IF THE SAID ORDER DO NOT DISCLOSE THE FACTS SET OUT IN EXPLANATION 1, THEY ARE NOT ENTITL ED TO THE BENEFIT OF DEEMING PROVISION CONTAINED IN PROVISION (1)(B). THE SAID DEEMING PRO VISION IS CONFINED ONLY TO THE ASSESSING OFFICER. 53. FROM THESE DISCUSSION, IT IS CLEAR THAT CONDITION PRECEDENT FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(L)(C) IS EXISTENCE OF CONDITION REFERRED TO IN THE SAID SECTION. THE PERSON INITIATING PENALTY PROCEEDINGS SHOULD BE SATISFIED ABOUT THE EXISTENCE OF SAID CONDITIONS WHICH SHOULD BE REFLEC TED IN THE ASSESSMENT ORDERS PASSED BY THEM. IN A GIVEN CASE, AFTER APPRECIATING THE EN TIRE RECORDS, THE OFFICER PASSING THE ORDER MAY CATEGORICALLY STATE THAT HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED INCOME. ONCE SUCH A FINDING IS RECORDED THAT IS SUF FICIENT TO INITIATE PENALTY PROCEEDINGS. ASSUMING SUCH A CATEGORICAL FINDING IS NOT RECORDED IN THE ORDER, AT LEAST, HE HAS TO RECORD FACTS AS CONTEMPLATED IN EXPLANATI ON 1. IF THESE FACTS ARE DISCERNIBLE FROM THE ASSESSMENT ORDER, THE DEEMING CLAUSE IN EX PLANATION 1 IS ATTRACTED AND THE INCOME IS DEEMED TO HAVE BEEN CONCEALED. THAT GIVES THE JURISDICTION TO THE OFFICER PASSING THE ORDER TO INITIATE THE PENALTY PROCEEDIN GS. IF THE OFFICER PASSING THE ASSESSMENT ORDER IS THE ASSESSMENT OFFICER, IN THE SAID ORDER, THE AFORESAID FACTS ARE NOT DISCERNIBLE, AT LEAST HE MUST DIRECT INITIATION OF PROCEEDINGS UNDER SECTION 271(L)(C). THEN SECTION (1)(B) IS ATTRACTED AND THESE CONDITIO NS DEEMED TO EXIST WHICH CONFERS JURISDICTION ON HIM TO INITIATE PENALTY PROCEEDINGS . SECTION (1)(B) HAS NO APPLICATION TO AN ORDER PASSED BY COMMISSIONER OF APPEALS OR COMMI SSIONER. WHO INITIATES PENALTY PROCEEDINGS 54. AS IS CLEAR FROM THE WORDS IN SECTION 271, IF THE ASSESSING OFFICER OR THE COMMISSIONER OF APPEALS OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE AMOUNT MENTIONED THEREIN. THE REFORE, THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE PERSON WHO IS SATISFIED ABOUT THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN T HE COURSE OF ANY PROCEEDINGS UNDER THIS ACT. IN A GIVEN CASE IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PR OCEEDINGS, IN APPEAL OR IN REVISION, THE AUTHORITY IS SATISFIED REGARDING CONCEALMENT AND FU RNISHING OF INACCURATE PARTICULARS, THEN IT IS THAT AUTHORITY WHICH IS SATISFIED ABOUT THE SAID CONCEALMENT OR FURNISHING OF ITA 2976/MUM/2016 17 INACCURATE PARTICULARS HAS TO INITIATE PENALTY PROC EEDINGS AND THEN PASS ORDERS IN RESPECT OF THE PENALTY TO BE IMPOSED. THE IMPOSITIO N OF PENALTY MAY BE DONE AT THE STAGE OF ASSESSMENT OR AT THE STAGE OF AN APPEAL. AT THE ASSESSMENT STAGE, THE ASSESSING OFFICER HAS TO ISSUE A NOTICE TO THE ASSESSEE TO SH OW CAUSE WHY A PENALTY SHOULD NOT BE IMPOSED AND THIS NOTICE HAS TO BE ISSUED IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS. THE IMPOSITION OF THE PENALTY HAS ALSO TO BE DONE B Y THE ASSESSING OFFICER BUT THIS CAN BE DONE WITHIN THE TIME PRESCRIBED IN SECTION 275. 55. IN THE CASE OF INITIATION OF PENALTY PROCEEDINGS D URING THE COURSE OF APPEAL OR REVISION PROCEEDINGS, THE AUTHORITY WHO HAS TO BE S ATISFIED IS THE AUTHORITY IN WHOSE PROCEEDINGS THE ISSUE IS EXAMINED AND NOT ANY OTHER AUTHORITY. THE LEVY OF PENALTY HAS ALSO TO BE DONE BY THE SAME OFFICER AS THE LANGUAGE USED IN THE LATER PART OF SECTION 271 IS THAT: 'HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY'. THE AUTHORITY IN WHICH PROCEEDINGS, THERE IS SATISFACTION OF CONCEAL MENT OR FURNISHING INACCURATE PARTICULARS OF INCOME ALONE CAN LEVY THE PENALTY AN D NOT ANY OTHER AUTHORITY. IF THE COMMISSIONER (APPEALS) IN THE COURSE OF APPEAL PROC EEDINGS IS SATISFIED THEN IT IS THE COMMISSIONER (APPEALS) WHO HAVE TO INITIATE THE PEN ALTY PROCEEDINGS AND ALSO COMPLETE THE SAME BY LEVYING THE PENALTY. HE CANNOT PERMIT THE ASSESSING AUTHORITY TO LEVY PENALTY. 56. PROVISIONS OF SECTION 274(3) MAKES IT CLEAR THAT I F AN AUTHORITY OTHER THAN THE ASSESSING OFFICER PASSES AN ORDER UNDER CHAPTER XXI WHICH DEALS WITH MATTERS OF PENALTIES THEN SUCH AUTHORITY HAS TO FORTHWITH SEND THE COPY OF THE ORDER TO THE ASSESSING OFFICER. THIS FORTIFIES THAT IT IS THE AU THORITY WHO IS SATISFIED IN THE COURSE OF THE PROCEEDINGS BEFORE IT HAS THE JURISDICTION TO I NITIATE AND LEVY OF PENALTY. THE ALLAHABAD HIGH COURT IN THE CASE OF MOTILAL SHAMSUN DAR V. CIT [1972] 84 ITR 186 HELD THAT WHEN THE AMOUNTS WERE DISCOVERED IN THE C OURSE OF APPELLATE PROCEEDINGS BEFORE HIM, IT WAS DISCOVERED BY HIM. IT WAS FOR HI M THEN TO IMPOSE THE PENALTY. IF HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE P ARTICULARS OF HIS INCOME OR HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS OF IT . 57. THE QUESTION OF THEIR RECORDING SATISFACTION AND T HEN CALLING UPON THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDINGS WOULD NOT A RISE. PENALTY PROCEEDINGS HAS TO BE INITIATED BY THE AUTHORITY WHICH IS SATISFIED ABOUT THE CONCEALMENT OF THE PARTICULARS OF THE INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. PROCEDURE FOR IMPOSING PENALTY 58. IT MUST BE NOTICED THAT THIS FINDING RECORDING CONCEALMENT IN THE ORDER TO BE PASSED BY THESE AUTHORITIES IS ONLY FOR THE PURPOSE OF INITIATING. THE SAID FINDING IS NOT CONCLUSIVE; IT IS IN THE NATURE OF PRIMA FACIE SATISFACTION, WHICH AUTHORISES THEM TO INITIATE THE PENALTY PROCEEDINGS. ONCE A PENALTY PROCEEDINGS IS VALIDLY INITIATED, T HEN UNDER SECTION 274(1) AN OBLIGATION IS CAST ON THE P ERSON INITIATING THE PROCEEDINGS TO ISSUE NOTICE TO THE ASSESSEE. WHEN SUCH A NOTICE IS ISSUED, IT IS OPEN TO THE ASSESSEE TO CONTEST THE ACCUSATION AGAINST HIM THAT HE HAS CONC EALED INCOME OR HE HAS FURNISHED INACCURATE PARTICULARS. AS THERE IS AN INITIAL PRES UMPTION OF CONCEALMENT, IT IS FOR THE ASSESSEE TO REBUT THE SAID PRESUMPTION. THE PRESUMP TION FOUND IN EXPLANATION 1 IS A ITA 2976/MUM/2016 18 REBUTTABLE PRESUMPTION. IF THE AUTHORITY, AFTER HEA RING THE ASSESSEE AND LOOKING INTO THE MATERIAL PRODUCED IN THE SAID PROCEEDINGS BEFORE HI M IS SATISFIED THAT THOUGH THE INCOME IS UNDISCLOSED THERE WAS NO INTENT TO AVOID TAX AND THEREFORE, IF HE HOLDS THERE IS NO CONCEALMENT OF INCOME, THEN QUESTION OF IMPOSING PENALTY WOULD NOT ARISE. IT MAY BE A CASE OF NOT DISCLOSING INCOME WITHOUT ANY INTENT TO AVOID TAX; IT MAY BE A CASE OF FURNISHING PARTICULARS WITHOUT ANY INTENTION TO AVO IDING TAX. BOTH STAND ON THE SAME FOOTING . IT IS ONLY WHEN THE AUTHORITY IS SATISFIED THAT N ON-DISCLOSURE OF INCOME OR FURNISHING INACCURATE PARTICULARS WAS WITH THE INTE NTION OF EVADING TAX, THEN IT AMOUNT TO CONCEALMENT, IT AMOUNTS TO FURNISHING INA CCURATE PARTICULARS. THEN, AT HIS DISCRETION, HE MAY IMPOSE PENALTY AS PROVIDED UNDER THE ACT . THEREFORE, MERELY BECAUSE THE ASSESSEE ACCEPTED ADDITION OR DELETION AND DID NOT CHALLENGE THE ASSESSMENT ORDER BY WAY OF APPEAL, IT CANNOT BE CON CLUDED THAT SUCH ADDITION OR DELETION AMOUNTS TO CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS. WHEN A PLEA IS TAKEN THAT IN ORDER TO AVOID LITIGAT ION AND PURCHASE PEACE, THE TAX LEVIED IS PAID WITH INTEREST, IF THE ASSESSEE IS ABLE TO D EMONSTRATE HIS BONA FIDES AND IF THE AUTHORITY IS SATISFIED ABOUT HIS BONAFIDES, THEN TH E QUESTION OF IMPOSING PENALTY WOULD NOT ARISE. SIMILARLY, IN CASES WHERE THOUGH THE TAX WAS NOT ACTUALLY DUE BUT STILL THE ASSESSEE PAYS TAX WITH A HOPE OF CLAIMING DEDUCTION S IN THE SUBSEQUENT YEARS, IF THE ASSESSEE IS ABLE TO DEMONSTRATE THERE WAS NO LIABIL ITY TO PAY TAX AT ALL, MERELY IF ASSESSEE PAYS TAX AND HE DOES NOT CHALLENGE ORDER, THAT WOULD NOT CONSTITUTE CONCEALMENT OF INCOME SO AS TO ENABLE THE AUTHORITI ES TO IMPOSE PENALTY. SIMILARLY, IN CASES, WHERE THE LEGAL POSITION IS NOT WELL SETTLED , WHEN FEW HIGH COURTS AND TRIBUNALS HAVE TAKEN A VIEW IN FAVOUR OF THE ASSESSEE AND SOM E HIGH COURTS AND TRIBUNALS HAVE TAKEN A VIEW IN FAVOUR OF THE REVENUE AND ON LEGAL ADVICE IF AN ASSESSEE RELIES ON THE SAID LEGAL POSITION FOR NOT DISCLOSING THE INCOME A ND FOR NON-PAYMENT OF TAX, CERTAINLY, THAT IS A FACT WHICH SHOULD WEIGH IN THE PENALTY PR OCEEDINGS AFTER THE ASSESEE HAS PAID TAX WITH INTEREST BEFORE IMPOSING PENALTY. NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS C AN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORI TY CATEGORICALLY RECORDS A FINDING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTION ED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUE D UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTEN CE OF THE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE O F RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION 1 OR IN EXPLANATION 1(B), THEN THOUGH PENALTY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT I S PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED I N SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSI NG PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CON TEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPAR TMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(L)(C) DO NOT EXIST AS SUC H HE IS NOT LIABLE TO PAY PENALTY. THE ITA 2976/MUM/2016 19 PRACTICE OF THE DEPARTMENT SENDING A PRINTED FORM W HERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW WHEN THE CONSEQUENCES OF THE ASSESSEE NOT REBUTTING THE INITIAL PRESUMPTI ON IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTLY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINC IPLES OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUC H PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME . NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CAS ES THERE MAY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH TH E OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER TH E ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATIS FACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 271(L)(C) WHEN IT IS A SINE QU A NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE I MPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENALTY PR OCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD OFFEND PRINC IPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GR OUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. TH E VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REFERENCE TO THE INFORMATION, FA CTS AND MATERIALS IN THE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDE R WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CA NNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FU RNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF T. ASHOK PAI V. CIT [2007] 292 ITR 11/161 TAXMAN 340 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF CIT V. MANU ENGG. [1980] 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF CIT V. VIRG O ITA 2976/MUM/2016 20 MARKETING (P.) LTD. [2008] 171 TAXMAN 156 , HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROP RIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. TH E STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE A S TO NON-APPLICATION OF MIND. INDEPENDENT PROCEEDING 62. THE PENALTY PROCEEDINGS ARE DISTINCT FROM ASSESSME NT PROCEEDINGS, AND INDEPENDENT THEREFROM. THE ASSESSMENT PROCEEDINGS ARE TAXING PR OCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATING FROM PROCEED INGS OF ASSESSMENT ARE INDEPENDENT AND SEPARATE ASPECTS OF THE PROCEEDING. SEPARATE PROVISION IS MADE FOR THE IMPOSITION OF PENALTY AND SEPARATE NOTICES OF DEMAN D ARE MADE FOR RECOVERY OF TAX AND AMOUNT OF PENALTY. ALSO SEPARATE APPEAL IS PROVIDED AGAINST ORDER OF IMPOSITION OF PENALTY. ABOVE ALL, NORMALLY, ASSESSMENT PROCEEDING S MUST PRECEDE PENALTY PROCEEDINGS. ASSESSEE IS ENTITLED TO SUBMIT FRESH E VIDENCE IN THE COURSE OF PENALTY PROCEEDINGS. IT IS BECAUSE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS. THE ASSESSEE CANNOT QUESTION THE ASSESSMENT JURISDICTIO N IN PENALTY PROCEEDINGS. JURISDICTION UNDER PENALTY PROCEEDINGS CAN ONLY BE LIMITED TO THE ISSUE OF PENALTY, SO THAT VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER IN PENALTY PROCEEDINGS . IT IS NOT POSSIBLE TO GIVE A FINDING THAT THE REASSESSMENT IS INVALID IN SUCH PENALTY PR OCEEDINGS. CLEARLY, THERE IS NO IDENTITY BETWEEN THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS. THE LATTER ARE SEPARATE PROCEEDINGS THAT MAY, IN SOME CASES, F OLLOW AS A CONSEQUENCE OF THE ASSESSMENT PROCEEDINGS. THOUGH IT IS USUAL FOR THE ASSESSING OFFICER TO RECORD IN THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS ARE BEING INITIATED, THIS IS MORE A MATTER OF CONVENIENCE THAN OF LEGAL REQUIREMENT. ALL THAT THE LAW REQUIRES, SO FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED, IS THAT THEY SHOULD BE I NITIATED IN THE COURSE OF THE PROCEEDINGS FOR ASSESSMENT. IT IS SUFFICIENT, IF TH ERE IS SOME RECORD SOMEWHERE, EVEN APART FROM THE ASSESSMENT ORDER ITSELF, THAT THE AS SESSING OFFICER HAS RECORDED HIS SATISFACTION THAT THE ASSESSEE IS GUILTY OF CONCEAL MENT OR OTHER DEFAULT FOR WHICH PENALTY ACTION IS CALLED FOR. INDEED, IN CERTAIN CASES, IT IS POSSIBLE FOR THE ASSESSING OFFICER TO ISSUE A PENALTY NOTICE OR INITIATE PENALTY PROCEEDI NGS EVEN LONG BEFORE THE ASSESSMENT IS COMPLETED. THERE IS NO STATUTORY REQUIREMENT THAT T HE PENALTY ORDER SHOULD PRECEDE OR BE SIMULTANEOUS WITH THE ASSESSMENT ORDER. IN POINT OF FACT, HAVING REGARD TO THE MODE OF COMPUTATION OF PENALTY OUTLINED IN THE STATUTE, THE ACTUAL PENALTY ORDER CANNOT BE PASSED UNTIL THE ASSESSMENT IS FINALISED. CONCLUSION 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EMERGES IS AS UNDER: (A) PENALTY UNDER SECTION 271(L)(C) IS A CIVIL LIABILIT Y. (B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING P ENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. ITA 2976/MUM/2016 21 (C) WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT F OR ATTRACTING CIVIL LIABILITY. (D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(L )(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. (E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNI BLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONAL AUTHORITY. (F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(L)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. (G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE ASSESS MENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271 (L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECA USE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). (H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO T HE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. (I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. (J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. (K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER O F ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UN EARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND A S OPINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. (L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANAT ION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATI ON OFFERED IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. (M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTAN TIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME A ND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PEN ALTY COULD BE IMPOSED. (N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECT ION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. (O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY SATIS FACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. ITA 2976/MUM/2016 22 (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFIC ALLY STATE THE GROUNDS MENTIONED IN SECTION 271(L)(C), I.E., WHETHER IT IS FOR CONC EALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. (R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDE D. ON THE BASIS OF SUCH PROCEEDINGS NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. (S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FI NDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. (T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSES SMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCE ED INGS OF ASSESSMENT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS . (U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS INSOFAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORRECT PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATT ER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED AS IN VALID IN THE PENALTY PROCEEDINGS. WE DO NOT FIND ANY INFIRMITY IN THE NOTICE DATED 20 -02-2014 ISSUED BY THE A.O. U/S 271(1)(C) R.W.S. 274 OF THE ACT WHEREIN TH E AO HAS CLEARLY FRAMED AN ALTERNATE CHARGES FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT AT THE STAGE OF ISSUE OF NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT .MORE-SO IT IS NOT A STANDARD PRINTED FORMAT WHICH IS SENT TO THE ASSESSEE RATHER THE SAME IS SPECIFICALLY DRAFTED BY THE AO BEFORE SENDING TO THE ASSESSEE WH ICH SHOWED APPLICATION OF MIND BY THE AO . IT IS ALSO NOT THE CASE THAT THE A O HAS FRAMED CHARGE UNDER ONE LIMB OF SECTION 271(1)(C) OF THE ACT AND LEVIED THE PENALTY UNDER THE SECOND LIMB OF SECTION 271(1)(C) OF THE ACT. THE AS SESSMENT ORDER DATED 20- 02-2014 ALSO CLEARLY SHOWED APPLICATION OF MIND BY THE AO BEFORE INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. IN THE CASE LAWS CITED BY THE ASSESSEE IN THE CASE OF DR. SARITA MILIND DAVARE V. ACIT (SUPRA), THE NOTICE ISSUED U/S 271(1)(C) OF THE ACT WAS PRIMARILY MEANT ITA 2976/MUM/2016 23 TO ASK THE TAX-PAYER TO FURNISH A RETURN OF INCOME AND MERELY AO MODIFIED THE LAST PARAGRAPH BY SHOW CAUSING THE TAX-PAYER TO EXP LAIN AS TO WHY AN ORDER IMPOSING A PENALTY SHOULD NOT BE MADE U/S 271(1)(C) OF THE ACT . IN THE CASE OF CHANDRA PRAKASH BUBNA(SUPRA) RELIED UPON BY THE ASSESSEE , IT WAS THE CASE WHERE PENALTY NOTICE SIMPLY STATED AS UNDER: I AM SATISFIED THAT THIS IS A FIT CASE WHERE PROVI SIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT ARE CLEARLY ATTRACT. WHILE IN THE INSTANT APPEAL THE AO HAS ISSUED NOTIC E U/S. 274 READ WITH SECTION 271(1)(C) OF THE ACT DATED 20-02-2014 WHERE IN THE AO RECORDED AS UNDER: WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2011-12, IT APPEARS THAT YOU HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN THE INSTANT APPEAL , THE AO HAS RECORDED SATISFA CTION IN DETAIL IN THE ASSESSMENT ORDER DATED 20-02-2014 BEFORE INVOKING P ENALTY PROVISIONS U/S 271(1)(C) OF THE ACT BY RECORDING AS UNDER:- 5. *** *** THE ASSESSEE HAS VIDE LETTER DATED 18.02.2014 FILED REVISED COMPUTATION OF INCOME OFFERING RS. 4,00,000/- AS DIRECTORS SIT TING FEES. THE EXPLANATION SUBMITTED BY THE ASSESSEE IS CONSIDERED . IT IS NOT ED THAT THE ASSESSEE HAS MADE DISCLOSURE OF INCOME OF RS. 4,00,000/- ONLY AF TER THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE DID NOT POI NTED OUT VOLUNTARILY AFTER RECEIPT OF STATUTORY NOTICE U/S 143(3) WHICH WAS ISS UED AFTER ONE YEAR OF FILING OF RETURN OF INCOME. EVEN AFTER THAT WHEN THE CASE WAS UNDER HEARING, THE ASSESSEE DID NOT OFFER THE INCOME OF RS.4,00,000/- BEING DIRECTORS SITTING FEES UNLESS HE WAS SPECIFICALLY ASKED TO EXPLAIN THE SAME . IT IS , THEREFORE EVIDENT FROM THE CONDUCT OF THE ASSESSEE THAT HE WAS TRYING TO EVADE THE INCOME TO THE EXTENT OF RS. 4,00,000/-. CONSIDERING THESE FACTS, INCOME OF RS. 4,00,000/- IS ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. CONSI DERING THESE FACTS, I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED HIS INCOM E BY FURNISHING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS. 4,00,000 /- AND THUS PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I T ACT, 1961 IS I NITIATED SEPARATELY ON THIS POINT. ITA 2976/MUM/2016 24 6.. *** *** THE ASSESSEE HAS VIDE LETTER DATED 18.02.2014 FILED REVISED COMPUTATION OF INCOME OFFERING RS.12,23,642/- UNDER THE HEAD SHOR T TERM CAPITAL GAINS . THE EXPLANATION SUBMITTED BY THE ASSESSEE IS CONSID ERED. IT IS NOTED THAT THE ASSESSEE HAS MADE DISCLOSURE OF INCOME OF RS.12,23, 642/- ONLY AFTER THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE DID NOT POINTED OUT VOLUNTARILY AFTER RECEIPT OF STATUTORY NOTICE U/S 1 43(2) WHICH WAS ISSUED AFTER ONE YEAR OF FILING OF RETURN OF INCOME. EVEN AFTER THAT WHEN THE CASE WAS UNDER HEARING, THE ASSESSEE DID NOT OFFER THE INCOME OF R S.12,23,642/- BEING REDEMPTION OF HDFC MUTUAL FUND UNLESS HE WAS SPECIF ICALLY ASKED TO EXPLAIN THE SAME. IT IS , THEREFORE EVIDENT FROM THE CONDUC T OF THE ASSESSEE THAT HE WAS TRYING TO EVADE THE INCOME TO THE EXTENT OF RS.12,2 3,642/- . CONSIDERING THESE FACTS, INCOME OF RS.12,23,642/- IS ASSESSED UNDER T HE HEAD INCOME FROM CAPITAL GAIN. IN VIEW OF THE ABOVE FACTS, I AM SATIS FIED THAT THE ASSESSEE HAS CONCEALED HIS INCOME BY FURNISHING INACCURATE PARTI CULARS OF INCOME TO THE EXTENT OF RS.12,23,642/- AND THUS PENALTY PROCEEDIN GS U/S 271(1)(C) IF THE I T ACT, 1961 IS INITIATED SEPARATELY ON THIS POINT. MERELY BECAUSE AO HAS MENTIONED ALTERNATE CHARGES A T THE STAGE OF ISSUE OF NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT WHICH IS A PRELIMINARY STAGE OF INITIATING PENALTY PROCEEDINGS, THE PROCEEDINGS CAN NOT BE HELD TO BE VITIATED, AS IN THE INSTANT CASE, THE AO HAS CLEARLY RECORDED DETAILED SATISFACTION AFTER APPLICATION OF MIND IN THE ASSESSMENT ORDER DATED 2 0-02-2014 AS IN THE INSTANT APPEAL THE ASSESSEE WAS CONFRONTED AND CORN ERED BY THE REVENUE TO HAVE NOT DISCLOSED THE INCOME EARNED BY WAY OF DIRE CTOR SITTING FEE OF RS. 4,00,000/- AND SHORT TERM CAPITAL GAINS ON REDEMPTI ON OF HDFC MUTUAL FUNDS TO THE TUNE OF RS. 12,23,642/- IN THE RETURN OF INCOME FILED BY THE ASSESSEE WITH THE REVENUE, TO WHICH THE ASSESSEE AD MITTED AND IMMEDIATELY AFTER BEING CONFRONTED BY REVENUE FILED REVISED COM PUTATION OF INCOME AND PAID DUE TAXES TO THE REVENUE. BY NO STRETCH OF IMA GINATION IT CAN BE HELD THAT THE ASSESSEE WAS NOT AWARE OF THE CHARGE AS FR AMED BY THE AO IN THE ASSESSMENT ORDER DATED 20-02-2014 FRAMED U/S 143(3) OF THE ACT WITH WHICH HE WAS BURDENED FOR INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. WE HAVE ALSO OBSERVED THAT IN THE ORDER DATED 26-08 -2014 PASSED BY THE AO U/S 271(1)(C) OF THE ACT LEVYING PENALTY ON THE AS SESSEE , THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE HAS CLE ARLY RECORDED THE CHARGE ITA 2976/MUM/2016 25 ON WHICH PENALTY HAD BEEN LEVIED ON THE ASSESSEE U/ S 271(1)(C) OF THE ACT, BY HOLDING AS UNDER : 5. THE ASSESSEES SUBMISSION HAS BEEN CONSIDERED , BUT THE SAME IS NOT FOUND ACCEPTABLE. THE ASSESSEE HAS NOT FURNISHED ANY CONC RETE EVIDENCE EITHER DURING ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDINGS, WHIC H ESTABLISH THAT THERE WAS REASONABLE CAUSE FOR NOT FURNISHING THE ABOVE INCOM E IN HIS RETURN OF INCOME. MERELY BECAUSE THE ASSESSEE IS NOT MAINTAINING BOOKS OF AC COUNTS, HE CANNOT GET RID OF OFFERING THE INCOME EARNED BY HIM DURING THE YEAR. FURTHER, THE INCOMES INVOLVED ARE ALSO NOT MEAGER THAT DUE TO OVERSIGHT , LEFT TO BE OFFERED. HAD THE ABOVE INCOMES LEFT BY OVERSIGHT , THE ASSESSEE WOULD HAVE OFFERED THE SAME ANY TIME AFTER FILING OF RETURN BY FILING REVISED RETURN . THE ASSESSEES ACT CLEARLY SHOWS HIS INTENTION OF EVADING TAX BY NOT DISCLOSING HIS ABOVE INCOMES EITHER IN RETURN O F INCOME OR BY FILING REVISED RETURN LATER ON. EVEN DURING ASSESSMENT PROCEEDINGS, THE A SSESSEE HAS NOT VOLUNTARILY OFFERED THE SAME FOR TAXATION. IT WAS ONLY WHEN QUE RIED BY THE AO THAT THE ASSESSEE OFFERED THE INCOMES AND FILED REVISED COMPUTATION O F INCOME. FROM THE ABOVE FACTS AND BY THE CONDUCT OF THE ASSESSEE, MENS-REA OF THE ASSESSEE IS VERY WELL ESTABLISHED . IN VIEW OF THE FACTS OF THE CASE AND ELABORATE DISCU SSION IN ASSESSMENT ORDER, IT IS HELD THAT THE ASSESSEE HAS CONCEALED INCOME BY FURNISHIN G INACCURATE PARTICULARS OF INCOME. THUS, THE ASSESSEE HAS COMMITTED DEFAULT U/ S. 271(1)(C) OF THE I.T.ACT AND THE CASE OF THE ASSESSEE IS A FIT CASE FOR LEVY OF PENA LTY. UNDER THESE CIRCUMSTANCES AND AS PER DETAILED REAS ONING AS SET OUT ABOVE BY US , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE A.O. AS WAS CONFIRMED BY LEARNED CIT(A), WE CONFIRM/UPHOLD THE APPELLATE ORD ER OF LEARNED CIT(A) BY CONFIRMING/SUSTAINING THE PENALTY OF RS. 3,13,000/- U/S 271(1)(C) OF THE ACT. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 2976/MUM/2016 FOR ASSESSMENT YEAR 2011-12 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY, 2017. # $% &' 27-02-2017 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 27-02-2017 [ ITA 2976/MUM/2016 26 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI I BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI